For many
aspiring artists, the plan is to get a major record label to notice them. For many record labels, the plan is to make a
profit. The problem, however, is that
the record labels are now seeing ever shrinking profit margins and some
aspiring artists are seeing even less than before. Even artists who are considered today’s
veterans in the music industry are scrambling to find security and a handsome
reward.
As the music
industry entered the new millennium it was introduced to an alternative to the
traditional recording contract. This alternative is called a 360 Deal. The company agrees to provide financial
support for the artist, including direct advances as well as funds for
marketing, promotion and touring. In
return, the artist agrees to give the company a percentage of all of their
income, including sales from recorded music, merchandise, live performances and
any other form of income. If you
noticed, I said the “company” and not the “record label”. These types of deals allow other companies in
the entertainment business, who do not consider themselves record labels, to
capitalize and take the opportunity to engage in signing acts. Something that was unheard of just a decade
ago.
In 2008, LiveNation made
news for their deal with hip-hop mogul Jay-Z.
LiveNation reportedly signed Jay-Z for a $150 million, which is one of
the biggest music contracts ever awarded.
LiveNation signs artists as a record label, but predominantly takes the
role of a promoter, rather than owner of music, which is their niche and what
they do well.
A 360 deal gives labels a
chance to fatten their pockets once again, but as you see the examples of Jay-Z,
Madonna, and U2, artists are finding success with these deals as well. If the advances
to artists continue to be generous, then artists definitely have the incentive
to jump at these types of deals.
However, critics of these deals feel that the artists are giving up way too
much in return for the initial payouts.
Other critics have even said that these types of deals eventually make
the artists feel like they are losing control, especially of their creativity. On the flip-side companies like LiveNation,
who offer these large deals, may have problems even generating any profits. So who is really winning? Are 360 deals really the solution? Moreover, the major record labels will
continue to struggle if they are not willing to match the money of similar 360
deals and artists will continue to flock towards companies like LiveNation. So again I pose the question, “Who is really
winning?”
Please be sure
to leave your feedback and comments below about who you believe is getting the
real deal. The company or the artists?
Check out this insightful
article titled “Exploring the 360 Deal”
for more information about 360 deals.
